Businesses Must Focus On Being Faster, Better, and Cheaper
Gianluigi is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
I'm writing this article in response of Benioff’s (CEO of Salesforce.com (NYSE: CRM) ) keynote at the Consumer Electronics Show (CES) in Last Vegas. I didn’t attend the show, but VentureBeat summarized his keynote, and based on the contents I have to agree that the keynote seems “a little cheesy." Why? Because he said, above all, that technology is getting cheaper and easier to use every year, and therefore startups better keep up, because they need to “be disruptive.” Of course I agree with the former, but the latter really doesn’t apply to the vast majority of companies.
I worked for a Dutch company where we developed a digital marketing technology. Being disruptive means that a whole business strategy needs to be supporting that. I can understand Benioff gives that advice, being from the most innovative company in the world, but not everyone can be that, and there are many reasons for this. Think of industry life cycles, product life cycles, core competences, investment budgets, cashflow, etc.
Business need to look at how they can be faster, better, and cheaper.
Unique Selling Points (USPs)
Organisations can differentiate themselves from others by offering new activities (in comparison to competitors) or that the same activities are executed differently. Currently, it’s very hard to be disruptive, to introduce a new activity that is so different it can be disruptive and can be really perceived as unique. Examples of companies who really disrupted markets are Apple, Google, Amazon and Salesforce for instance.
On the other hand, the same activities can be executed differently, businesses need to excel in doing one thing great, and in comparison to competitors they need to do it faster, better and cheaper.
If we take Salesforce and its competitive landscape as example, Oracle (NASDAQ: ORCL)’s acquisition of Eloqua is a way to be faster, better and cheaper compared to for instance Salesforce due to creating an end-to-end experience for customers. The end-to-end experience is faster (in relation to time-investments for users compared to other tools such as Salesforce), better (because it creates a holistic experience and is offered the ability to measure better) and cheaper (because one tool suffices, but of course can depend on Oracle versus a set of tools).
Being “Better” is subjective and always needs to be reasoned from the target audience’s perspective.
IPTV and smart TV
Apple is known for its superior (better and nicer) experience than for instance Google TV (Android), and Apple knows it can build on this advantage.
On the other hand, if we take a look at Google (NASDAQ: GOOG) who is more open, they can focus more on faster and cheaper advantages because they could provide a completer ecoystem of devices that are interconnected, thus less trouble (faster) and relatively cheaper because no additional devices are needed to interlink them.
Intel on the other hand is similar to Apple, they are creating a set-top-box (STB) that will offer cable channels over the Internet regardless of provider. It will offer consumers the ability to subscribe to content per channel and per show. This not only fits convenience (better and faster), but it could be cheaper (to their target audience) as they are building important components themselves. If Intel can really achieve this modularity and convience, it could be disruptive.
Value Disciplines Model
In order to ensure you are getting the most out of handling your activities in a different way, (amongst others) have a look at the known Value Disciplines Model which I use also in cases.
The Value Disciplines Model by Treacy and Wiersema describes three generic disciplines. Companies need to choose one and act upon it consistently, as explained by SayEconomy.com:
a) Operational excellence: the companies that pursue this discipline provide the customers with products at low cost. Standardized, limited but good quality products are provided. Mac Donald’s, Dell, FedEx are some companies that pursue this discipline. IT companies that focus on this consider computing as a utility.
b) Customer intimacy: the companies that focus on customer intimacy continually provide products and services that fulfill the demands and needs of the customers. Often it includes understanding the problem from technical and political perspective.
c) Product Leadership: the companies that focus on this discipline are risk oriented and are considered for their future. They provide solutions to their customers. The companies focus on that area where the companies are ready to invest in high risk ventures. They produce very high quality products and services in a competitive environment.
Choose which discipline your organisation adheres and amplify it by being better, faster and/or cheaper compared to your competitors.
As for companies that aren't disruptive, you won't end up on a landfill as long as you are better, faster and/or cheaper than your competitors.
GLCuccureddu has no position in any stocks mentioned. The Motley Fool recommends Apple, Google, Intel, and Salesforce.com. The Motley Fool owns shares of Apple, Google, Intel, and Oracle.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!